You have taken 3-month deposits of EUR 10,000,000.00 at 0.60%, EUR 5,000,000.00 at 0.40% and EUR 5,000,000.00 at 0.50%. What is the average rate of your long position?

Question

Quizplus · Accepted Answer

To calculate the average rate of a long position, we need to find the weighted average of the interest rates. The formula for weighted average is (amount_1 x rate_1 + amount_2 x rate_2 + amount_3 x rate_3)/(total amount). Using this formula, we get:

(10,000,000 x 0.60% + 5,000,000 x 0.40% + 5,000,000 x 0.50%) / 20,000,000 = 0.525%

Therefore, the average rate of the long position is 0.525%. Option A is the correct answer.

You Have Taken 3-Month Deposits of EUR 10,000,000